The amount of income tax paid by self-assessment taxpayers has jumped 31 per cent to hit a record £38bn in the past year, up from £29bn the previous year, according to an analysis of HMRC tax receipts that was shared exclusively with City A.M. today.
The boom in tax revenues from the self-employed is because they are now under pressure to repay the tax they have been deferring since the start of the Covid-19 outbreak, according to accountancy group UHY Hacker Young. It has meant the self-employed having to pay much higher tax bills than normal.
“These figures show HMRC is starting to claw back the tax owed by self-assessment taxpayers. It appears we’ve passed peak leniency from HMRC,” Graham Boar, partner at UHY Hacker Young, told City A.M.
As one of the Government’s Covid support measures, the self-employed were given the option to defer their July 2020 payment on account last year, until 31 January of this year.
However, with that deadline having passed taxpayers are now having to pay that outstanding tax bill or negotiate a new extension on that payment with HMRC.
Many individuals and businesses are still struggling to pay their tax bills as the impact of Covid on the economy is far from finished.
Boar said that self-employed that still find themselves unable to pay their tax bills should consider making use of Time to Pay arrangements. “This is where payments are staggered in instalments, usually over a 12-month period,” he explained.